Michaelmas Term [2012] UKSC 42 On appeal from: [2010] EWCA Crim 1575

 

JUDGMENT
R v Varma (Respondent)
before
Lord Phillips
Lord Mance
Lord Clarke
Lord Dyson
Lord Reed
JUDGMENT GIVEN ON
10 October 2012
Heard on 27 June 2012
Appellant Respondent
David Perry QC Hugh Southey QC
William Hays Rupert Hallowes
(Instructed by Crown
Prosecution Service)
(Instructed by Frame
Smith Solicitors)
LORD CLARKE (with whom Lord Dyson and Lord Reed agree)
Introduction
1. On 27 November 2008, at the Crown Court in Isleworth, the respondent,
Aloke Varma, pleaded guilty to three offences of being knowingly concerned in
the fraudulent evasion of duty, contrary to section 170(2)(a) of the Customs and
Excise Management Act 1979. The offences were committed on 24 October 2007
and 3 and 13 April 2008. On each occasion the defendant was stopped at Gatwick
Airport and found to be in possession of a quantity of tobacco which he had
brought into the United Kingdom without payment of the relevant import duties.
Following his pleas of guilty, the matter was adjourned for sentence.
2. I take these facts from the agreed statement of facts and issues. On 15
January 2009 His Honour Judge Katkhuda (“the judge”), exercising his powers
under section 12 of the Powers of Criminal Courts (Sentencing) Act 2000,
sentenced Varma to a conditional discharge for a period of two years. In deciding
that this was the appropriate sentence, the judge referred to Varma’s psychological
problems and facial neuralgia. Confiscation proceedings under Part 2 of the
Proceeds of Crime Act 2002 (“the 2002 Act”) were postponed.
3. The confiscation hearing was held on 3 April 2009. The judge found the
value of the defendant’s benefit to be £7,257.86 and the available amount to be
£1,500. Each of these figures had been agreed between the parties. A confiscation
order was made in the sum of £1,500, which was ordered to be paid by 31 March
2010, with a term of imprisonment of 45 days in default of payment.
4. On 13 July 2009 Varma sought leave to appeal out of time against the
confiscation order. He relied on R v Clarke [2009] EWCA Crim 1074, [2010] 1
WLR 223, in which the Court of Appeal (comprising Hooper LJ, Cox J and the
Recorder of Nottingham) held in a reserved judgment that the Crown Court does
not have the power to make a confiscation order against a defendant following
conviction for an offence if he or she is made the subject of an absolute or
conditional discharge in respect of that same offence. The essential reasoning was
that it was inappropriate to punish a defendant by imposing a confiscation order in
a case in which (by virtue of the fact that a conditional discharge had been
imposed) the court thought that punishment was inexpedient.
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5. Varma’s appeal was heard on 10 June 2010, together with three similar
cases. The defendant in each of the four cases before the Court of Appeal had
pleaded guilty in the Crown Court to one or more offences, had received a
conditional discharge and had been made the subject of a confiscation order under
the 2002 Act. The ground of appeal in each case was that, following Clarke, the
Court had no power to make a confiscation order. According to the agreed
statement of facts and issues, oral argument was constrained by the Court of
Appeal’s clear indication that it wished to focus on whether it was bound by
Clarke. On 8 July 2010 the Court of Appeal (Lord Judge CJ, Goldring LJ and
Rafferty, Wilkie and King JJ) handed down their judgment in each of the four
appeals: R v Magro, R v Brissett, R v Smith and R v Varma [2010] EWCA Crim
1575, [2011] QB 398.
6. The Court of Appeal held that, following the decision in Clarke, the Crown
Court did not have power to make a confiscation order against a defendant
following conviction for an offence if he or she receives an absolute or conditional
discharge in respect of that offence. Giving the judgment of the court, Lord Judge
CJ made clear (at para 29) that, but for the decision in Clarke, the court would
have reached a contrary conclusion. On this basis, the Court of Appeal extended
time to appeal in the case of Varma, allowed the appeal against sentence and
quashed the confiscation order. The court held that a point of law of general public
importance was involved in their decision and certified the following question:
“Does the Crown Court have power to make a confiscation order
against a defendant following conviction for an offence if he or she
receives an absolute or conditional discharge for that offence?”
This court subsequently granted permission to appeal. The three remaining
applications for leave to appeal against sentence were adjourned pending the
outcome of this appeal.
7. As agreed in the statement of facts and issues, the issue which arises for
consideration in this appeal is whether the Crown Court has power to make a
confiscation order against a defendant following conviction for an offence if he or
she receives an absolute or conditional discharge for that offence.
The statutory framework
8. Section 12 of the Powers of Criminal Courts (Sentencing) Act 2000,
provides:
Page 3
“(1) Where a court by or before which a person is convicted of an
offence … is of the opinion, having regard to the circumstances
including the nature of the offence and the character of the offender,
that it is inexpedient to inflict punishment, the court may make an
order either –
(a) discharging him absolutely; or
(b) if the court thinks fit, discharging him subject to the
condition that he commits no offence during such period, not
exceeding three years from the date of the order, as may be
specified in the order …
(7) Nothing in this section shall be construed as preventing a court,
on discharging an offender absolutely or conditionally in respect of
any offence, from making an order for costs against the offender or
imposing any disqualification on him or from making in respect of
the offence an order under section 130, 143 or 148 below
(compensation orders, deprivation orders and restitution orders)”.
As is apparent, there is no reference in subsection (7) to confiscation orders.
9. At the date when section 12 of the 2000 Act came into force, section 2(6) of
the Drug Trafficking Act 1994, repeating section 1(6) of the Drug Trafficking
Offences Act 1986, provided:
“No enactment restricting the power of a court dealing with an
offender in a particular way from dealing with him also in any other
way shall by reason only of the making of an order under this section
restrict the Crown Court from dealing with an offender in any way
the court considers appropriate in respect of a drug trafficking
offence.”
Similar provision was made, with necessary alterations to the language, to deal
with non-drug trafficking offences, by section 72(6) of the Criminal Justice Act
1988.
10. Section 14 of the 2000 Act provides:
“(1) Subject to subsection (2) below, a conviction of an offence for
which an order is made under section 12 above discharging the
offender absolutely or conditionally shall be deemed not to be a
conviction for any purpose other than the purposes of the
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proceedings in which the order is made and of any subsequent
proceedings which may be taken against the offender under section
13 above.

(3) Without prejudice to subsections (1) and (2) above, the
conviction of an offender who is discharged absolutely or
conditionally under section 12 above shall in any event be
disregarded for the purposes of any enactment or instrument which –
(a) imposes any disqualification or disability upon convicted
persons; or
(b) authorises or requires the imposition of any such
disqualification or disability.

(6) Subsection (1) above has effect subject to section 50(1A) of the
Criminal Appeal Act 1968 and section 108(1A) of the Magistrates’
Courts Act 1980 (rights of appeal); and this subsection shall not be
taken to prejudice any other enactment that excludes the effect of
subsection (1) or (3) above for particular purposes.”
11. Section 6 of the Proceeds of Crime Act 2002, as amended, provides:
“(1) The Crown Court must proceed under this section if the
following two conditions are satisfied.
(2) The first condition is that a defendant falls within any of the
following paragraphs –
(a) he is convicted of an offence or offences in proceedings
before the Crown Court; …
(3) The second condition is that –
(a) the prosecutor asks the court to proceed under this section,
or
(b) the court believes it is appropriate for it to do so.
(4) The court must proceed as follows—
(a) it must decide whether the defendant has a criminal
lifestyle;
(b) if it decides that he has a criminal lifestyle it must decide
whether he has benefited from his general criminal conduct;
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(c) if it decides that he does not have a criminal lifestyle it
must decide whether he has benefited from his particular
criminal conduct.
(5) If the court decides under subsection (4)(b) or (c) that the
defendant has benefited from the conduct referred to it must—
(a) decide the recoverable amount, and
(b) make an order (a confiscation order) requiring him to pay
that amount.
(6) But the court must treat the duty in subsection (5) as a power if it
believes that any victim of the conduct has at any time started or
intends to start proceedings against the defendant in respect of loss,
injury or damage sustained in connection with the conduct.
(7) The court must decide any question arising under subsection (4)
or (5) on a balance of probabilities. …”
Section 13 of the 2002 Act provides:
“(1) If the court makes a confiscation order it must proceed as
mentioned in subsections (2) and (4) in respect of the offence
or offences concerned.
(2) The court must take account of the confiscation order
before –
(a) it imposes a fine on the defendant, or
(b) it makes an order falling within subsection (3).
(3) These orders fall within this subsection –
(a) … (compensation orders);
(b) … (forfeiture orders);
(c) … (deprivation orders);
(d) … (forfeiture orders).
(4) Subject to subsection (2), the court must leave the confiscation
order out of account in deciding the appropriate sentence for the
defendant …”
Section 14 of the 2002 Act provides:
“(1) The court may –
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(a) proceed under section 6 before it sentences the defendant
for the offence … or
(b) postpone proceedings under section 6 for a specified
period.

(11) A confiscation order must not be quashed only on the ground
that there was a defect or omission in the procedure connected with
the application for or the granting of a postponement.
(12) But subsection (11) does not apply if before it made the
confiscation order the court –
(a) imposed a fine on the defendant;
(b) made an order falling within section 13(3);
(c) made an order under section 130 of the Sentencing Act
(compensation orders).”
Section 15 of the 2002 Act provides:
“(1) If the court postpones proceedings under section 6 it may
proceed to sentence the defendant for the offence (or any of the
offences) concerned.
(2) In sentencing the defendant for the offence (or any of the
offences) concerned in the postponement period the court must not –
(a) impose a fine on him,
(b) make an order falling within section 13(3), or
(c) make an order for the payment of compensation under
section 130 of the Sentencing Act.
(3) If the court sentences the defendant for the offence (or any of the
offences) concerned in the postponement period, after that period
ends it may vary the sentence by –
(a) imposing a fine on him,
(b) making an order falling within section 13(3), or
(c) making an order for the payment of compensation under
section 130 of the Sentencing Act.
(4) But the court may proceed under subsection (3) only within the
period of 28 days which starts with the last day of the postponement
period.

Page 7
(7) The postponement period is the period for which proceedings
under section 6 are postponed.”
Statutory construction
12. In my opinion the question whether the Crown Court has power to make a
confiscation order under Part 2 of the 2002 Act in a case where the court has given
the defendant an absolute or conditional discharge depends upon the true
construction of sections 6 and 13 to 15 of that Act. I have reached the clear
conclusion that there is, not only such a power, but in most cases a duty to make
such an order for the reasons set out below.
13. It is first important to have regard to the duties imposed upon the court by
section 6. Those duties are contained in section 6(1), (4), (5) and (7). The duties
are absolute, subject to subsection (6), which qualifies subsection (5). By
subsection (1), the court must proceed under the section if the two conditions in
subsections (2) and (3) are satisfied. Subsection (2)(a) is satisfied if the defendant
is convicted. Subsection (3) is satisfied if, as in this case, the prosecutor asks the
court to proceed under the section. If the prosecutor does not ask the court to
proceed under the section, subsection (3) will also be satisfied if the court believes
that it is appropriate to do so. There was no argument in this case as to the correct
approach of the judge in such a case and I therefore say nothing about it.
14. If those conditions are met (as they were in this case), the court must
proceed as set out in subsection (4), under which it must decide whether the
defendant has a criminal lifestyle and, if so, whether he has benefited from his
general criminal conduct and, if he does not have a criminal lifestyle, whether he
has benefited from his particular criminal conduct. There are specific provisions
relating to those questions which are not relevant for the purposes of resolving the
issue in this appeal. By subsection (5), if the court decides that the defendant has
benefited from his general criminal conduct or his particular criminal conduct, it
must decide the recoverable amount and make a confiscation order requiring him
to pay that amount. Subsection (6) converts that duty into a power in
circumstances which are not relevant for present purposes. Sections 7 to 12 are
also for the most part irrelevant for present purposes.
15. It can be seen that there is nothing in section 6 which suggests that the court
should not make a confiscation order where it gives or proposes to give the
defendant an absolute or conditional discharge. On the contrary section 6(1) is
expressed in absolute terms in that it leaves the court with no discretion whether or
not to make a confiscation order if the conditions in subsections (2) and (3) are
satisfied. Subsection (4) then provides how the court must proceed and subsection
Page 8
(5) provides that, where the court decides that the defendant has benefited from
relevant criminal conduct, it must decide the recoverable amount (in accordance
with section 7) and must make a confiscation order requiring him to pay that
amount.
16. Section 13 expressly provides what the court is to do if it makes a
confiscation order. By subsection (1) it must proceed as mentioned in subsections
(2) and (4). By subsection (2) it must take account of the confiscation order before
it imposes a fine on the defendant or imposes any of the financial penalties
specified in subsection (3). Subsection (5) and (6) contain provisions which relate
to a case where the court makes both a confiscation order and a compensation
order under section 130 of the 2000 Act.
17. Section 13(4) is of significance in the context of this appeal. It provides
that, subject to subsection (2), the court must leave the confiscation order out of
account in deciding the appropriate sentence for the defendant. It is important to
note that the purpose of section 13(4) is not to limit the scope of the confiscation
order, let alone to prohibit the making of such an order. It could not have that
effect because it assumes that a confiscation order has been made. However that
may be, as I see it, the expression “in deciding the appropriate sentence for the
defendant” must be a reference to the sentencing process, at which the court will
consider how the defendant should be dealt with. As part of that process the court
will no doubt consider all the options open to it, including the option of giving the
defendant an absolute or conditional discharge. It is sometimes said that an
absolute or conditional discharge is not a sentence because, under section 12(1) of
the 2000 Act, the court may make such an order only if it is of the opinion that “it
is inexpedient to inflict punishment”. Whether such an order is a sentence or not, it
is in my opinion an order made as a result of “deciding the appropriate sentence”
within the meaning of section 13(4).
18. The effect of section 13(4) is that, in making that decision, the court must
leave the confiscation order out of account. It was not suggested in argument that
it would not be open to the court which had made a confiscation order to give the
defendant an absolute or conditional discharge. The Court of Appeal thought (at
para 28) that it would in principle be free to do so. I agree, although whether it
would have power to do so would depend upon whether the court was of the
opinion that it was inexpedient to inflict punishment. In deciding that question, by
reason of section 13(4), it must, subject to subsection (2), leave the confiscation
order out of account. All naturally depends upon the circumstances and it will no
doubt be a rare case in which it will be appropriate to make an order in the form of
an absolute or conditional discharge. However, it does not seem to me to be
necessarily wrong in principle for a court to conclude that it is inexpedient to
inflict punishment in a case where the defendant has benefited from his criminal
conduct and a confiscation order has been made. For example, it may be
Page 9
inappropriate to impose a fine or other financial penalty in the light of the
confiscation order, perhaps because of the defendant’s means, and there may be
strong mitigation which persuades the court that it would not be appropriate to
impose a sentence of imprisonment or a community order.
19. Some assistance is also to be derived from sections 14 and 15. Subsections
(1) to (4) of section 14 provide that the court may either (a) proceed under section
6 before it sentences the defendant or (b) postpone proceedings under section 6 for
a period or periods up to a maximum of two years, although the maximum does
not apply if there are exceptional circumstances. Section 15(1) provides that, if the
court postpones proceedings under section 6, it may proceed to sentence the
defendant. Although sections 14 and 15 contemplate the postponement of the
section 6 proceedings, they do not nullify the duty of the court to act under section
6. Thus, where, as is common in practice, the court proceeds to sentence before the
confiscation proceedings under section 6, the duty of the court to proceed under
section 6 remains. The Court of Appeal has correctly so held on a number of
occasions: see eg R v Hockey [2007] EWCA Crim 1577, [2008] 1 Cr App R (S)
279.
20. The effect of section 15(2) and (3) is that, where the confiscation
proceedings are postponed and the defendant is sentenced during the postponement
period, the court may not impose a fine or other financial penalty upon him, but
(subject to subsection (4)) the court may subsequently vary the sentence, by
imposing a fine or other financial penalty, after the postponement period. Those
provisions expressly contemplate confiscation proceedings after the end of the
postponement period. They are consistent with section 13(2), which provides that
the court must take account of the confiscation order before it imposes a fine or
other specified financial penalty. Thus a sentence passed before a confiscation
order is made cannot include a fine or other financial penalty because to do so
would be inconsistent with section 13(2). By section 15(3) the Act contemplates
that in those circumstances, when a confiscation order is made after the end of the
postponement period, the court may then think it appropriate to impose a fine or
other financial penalty, in which case it must take account of the confiscation order
in accordance with section 13(2). The importance of these provisions for present
purposes is that they show that the statutory scheme envisages, indeed requires,
that confiscation proceedings take place after the end of the postponement period.
21. In summary, the position as I see it on the true construction of the 2002 Act
is that the court remains under a duty to proceed under section 6 and, subject to the
express terms of the section, must make an order. In the case in which the section
6 proceedings take place before the defendant is sentenced, as stated above I can
see no basis upon which it could be submitted to the court that no confiscation
order should be made because it would be appropriate to give the defendant an
absolute or conditional discharge. There is nothing in the Act which gives the court
Page 10
power to decline to discharge its duty to make a confiscation order under section 6
on that or any other ground.
22. On the other hand, if the court decides (as it is entitled to do under section
15(1)) to postpone the confiscation proceedings under section 6 and proceed to
sentence the defendant, if it makes an order for an absolute or conditional
discharge, again I can see no basis upon which the making of such an order could
absolve the Crown Court from its duty to proceed under section 6 or, having done
so, from its duty to make a confiscation order under that section. If the relevant
subsections of section 6 were satisfied, it would be bound to make such an order
by reason of the plain words of subsection (1).
23. I turn to consider those conclusions in the light of the decision in Clarke,
the history of the 2002 Act, the meaning of punishment in section 12(1) of the
2000 Act and the position in Scotland.
The decision in Clarke
24. In Clarke the Court of Appeal said at para 48, in my opinion correctly, that,
if the 2002 Act is read on its own, there could be no doubt that the court has
jurisdiction to make a confiscation order. Equally it recognised at para 77 that the
fact that the 2002 Act imposes a mandatory regime is “obviously” a powerful
argument for saying that the court must proceed under section 6 even though the
defendant is being absolutely or conditionally discharged, but in the remainder of
para 77 it summarised its reasons for rejecting the argument.
25. However before doing so, it considered the position under section 14 of the
2000 Act. It first rejected the argument that, as a matter of jurisdiction, section 14
prevented the court from making both a confiscation order and an order for an
absolute or conditional charge. It did so on two bases. The first (at para 46) was
that the court had jurisdiction to make a confiscation order under section 14(1)(a)
of the 2002 Act before proceeding to sentence the defendant. There was nothing
in section 14 of the 2000 Act retrospectively to deprive the court of that
jurisdiction. The second was this. By section 14(1) of the 2000 Act, a conviction of
an offence for which an order is made under section 12 of the 2000 Act
discharging the offender absolutely or conditionally “shall be deemed not to be a
conviction for any purpose other than the purposes of the proceedings in which the
order is made”. The court held that a conviction which leads to the conditional or
absolute discharge in the circumstances of the instant case is a conviction in the
same proceedings as those in which the confiscation order is made, so that the
conviction is not deemed not to be a conviction, within section 14(1): see paras 68
Page 11
and 70 in Clarke and para 17 in the Court of Appeal’s judgment in the instant case.
I agree with that analysis.
26. The critical question was whether section 12 of the 2000 Act prevents the
Crown Court from making a confiscation order and an absolute or conditional
discharge order. The reasons given by the court in Clarke for answering that
question in the affirmative were these (at para 77):
“However, in the light of R v Savage (1983) 5 Cr App R (S) 216 and
R v Young (1990) 12 Cr App R (S) 262, section 12(7) [of the 2000
Act] and the history of section 12(7), we have reached the conclusion
that the Crown Court has no power to make a confiscation order
against a defendant following conviction of an offence if he or she
receives an absolute or conditional discharge for that offence. If
Parliament had wanted to include confiscation orders within the
1973 predecessor to section 12 (see para 37 above) or in the 2000
Act, it could easily have done so. We are mindful of the fact that the
orders which had been made in R v Savage and R v Young were
made under legislation which gave the power to make the order but
did not require the making of an order, but we do not think that this
affects the conclusion which we have reached.”
27. The argument accepted by the court in Clarke was that, as a matter of
principle or law, section 12 of the 2000 Act prevented the Crown Court from
making both an order for an absolute or conditional discharge and a confiscation
order. The court concluded (at para 31) that there is a general principle or rule of
law that no punitive order may be made in conjunction with an absolute or
conditional discharge unless (a) it is listed in section 12(7) of the 2000 Act (viz
orders for costs or disqualification, compensation orders, deprivation orders or
restitution orders) or (b) the enactment which permits or requires the punitive order
to be made expressly or impliedly provides for the making of that punitive order
notwithstanding section 12(7).
28. As it said in para 77, the court derived that principle from the two earlier
decisions of the Court of Appeal in Savage and Young. The issue in Savage, in
which the appellant pleaded guilty to handling stolen goods, was whether a
deprivation order under section 43 of the Powers of Criminal Courts Act 1973 in
respect of a motor car could stand with a conditional discharge for the handling.
The issue in Young, in which the appellant pleaded guilty to managing a company
as an undischarged bankrupt, was whether a disqualification under section 2 of the
Company Directors Disqualification Act 1986 could stand with a conditional
discharge on the count on which he had pleaded guilty. It was held in both cases
Page 12
that it could not. As Brooke J put it in Young at p 267, it was “quite inappropriate
for a [disqualification] to be linked with a conditional discharge”.
29. As is plain from section 12(7) of the 2000 Act, which re-enacted earlier
statutes, the result in both those cases was reversed by statute. However that may
be, in my opinion the principle in those cases does not apply to the problem under
consideration in this appeal. As expressly recognised in Clarke, in Savage and
Young the court was considering whether a discretionary order (ie of deprivation or
disqualification) could stand with an absolute or conditional discharge. In the
instant case, for the reasons given above, the confiscation order was not made in
the exercise of a power to impose it but in the discharge of a duty to do so. This is
in my view a critical distinction. See further paras 33 to 39 below.
30. The Court of Appeal in Clarke accepted the force of that point but held that
Parliament must have intended that the court should not have a power or duty to
make a confiscation order in circumstances in which an order for an absolute or
conditional discharge was made because the Act did not include a reference to
confiscation in section 12(7). However, it was accepted in Clarke at paragraph 46
(and it is not and could not be in dispute) that the Crown Court has jurisdiction
under section 6 of the 2000 Act to make a confiscation order before the judge
decides on sentence. The court added that such an order “would (presumably) have
to be quashed if, subsequently, an order of absolute or conditional discharge was
made” but it recognised that there was no express power to do that. For my part, I
can see no mechanism by which a lawful confiscation order made by a court
pursuant to its duty under section 6 could be quashed. The Crown Court would
have no jurisdiction to quash it and I can see no basis upon which the Court of
Appeal could properly quash it either. In Clarke the court’s only solution to this
problem was as stated in para 78, namely that, given that a confiscation order can,
“at least in theory”, be made before passing sentence it would, as the court put it,
“obviously be prudent in those very rare cases where an absolute or conditional
discharge is a possibility, to decide upon sentence first”. In the instant case the
Court of Appeal described that suggestion as “an extra legislative process” (para
28) and described the removal of the confiscation order as one which does not
easily fit with the structure of the legislative provisions in sections 6, 14 and 15 of
the 2002 Act. I would go further. In my opinion it is inconsistent with them.
31. As I see it, the fact that there is no reference to a confiscation order in
section 12(7) of the 2000 Act does not lead to the conclusion that Parliament
intended that such an order could not stand with an absolute or conditional
discharge. Whether it can or not depends upon the true construction of the 2002
Act, which to my mind is in clear terms.
Page 13
32. For these reasons I would reject the first of the two reasons given in para 31
in Clarke, namely that no punitive order may be made in conjunction with an
absolute or conditional discharge unless (a) it is listed in section 12(7) of the 2000
Act (viz orders for costs or disqualification, compensation orders, deprivation
orders or restitution orders). The second reason was that no such order may be
made unless (b) the enactment which permits or requires the punitive order to be
made, here the 2002 Act, expressly or impliedly provides for the making of that
punitive order notwithstanding section 12(7).
33. I would not accept the second reason precisely as formulated, if only
because it assumes that the principles in Savage and Young apply in the present
context, whereas to my mind they do not apply to duties imposed upon the court as
opposed to powers conferred upon it. It is true that there is an argument, which
was advanced on behalf of the respondent, that the principle in Savage and Young
applies to duties as well as powers. Thus attention was drawn to Taylor v Saycell
[1950] 2 All ER 887 and Dennis v Tame [1954] 1 WLR 1338 and to section 46 of
the Road Traffic Offenders Act 1988. In this regard the submission made on behalf
of the respondent can be summarised in this way.
34. Historically, an important forerunner of section 12(1) of the 2000 Act was
section 7(1) of the Criminal Justice Act 1948 (“the 1948 Act”), which contained
the original section which provided for an absolute or conditional discharge if it
was inexpedient to inflict punishment. Section 12(2) of the 1948 Act, which was a
forerunner of section 14(3) of the 2000 Act, provided that the conviction of an
offender who is discharged absolutely or conditionally shall be disregarded “for
the purposes of any enactment which imposes any disqualification or disability
upon convicted persons, or authorises or requires the imposition of any such
disqualification or disability”.
35. These sections were considered in the cases of Taylor v Saycell and Dennis
v Tame, which were both decisions of the Divisional Court presided over by Lord
Goddard CJ. In Taylor v Saycell the respondents were convicted by magistrates of
using a vehicle without insurance. They were fined and disqualified from holding a
licence for 12 months. They appealed to the Crown Court, which quashed the fines
and the disqualifications and substituted conditional discharges. On a case stated
by the prosecutor, the Divisional Court quashed the conditional discharges on the
basis that there was no evidence upon which it could be said that it was
inexpedient to inflict punishment. Moreover no special reasons had been advanced
to avoid what would otherwise be a mandatory disqualification. At p 889H Lord
Goddard said, obiter, that convictions under the Road Traffic Act 1930 (“the RTA
1930”) were within section 12(2) of the 1948 Act, that it was within the
jurisdiction of the court to make an order for a conditional discharge and that such
an order would avoid the necessity for disqualification. In Dennis v Tame the
defendant was given a conditional discharge, which had the effect under section
Page 14
12(2) of avoiding disqualification. The conditional discharge was set aside on the
basis that the Divisional Court had said more than once that the conditional
discharge provisions should not be used in order to avoid disqualification in cases
where, under the RTA 1930, the defendant must be disqualified in the absence of
special circumstances. It further held that there were no special circumstances on
the facts.
36. Attention was also drawn to section 46 of the Road Traffic Offenders Act
1988 (“the RTOA 1988”), which was relied upon on behalf of the respondent. It
provides, so far as material (and as set out in Clarke at para 52):
“Notwithstanding anything in section 14(3) of the Powers of
Criminal Courts (Sentencing) Act 2000 … a court in England and
Wales which on convicting a person of an offence involving
obligatory or discretionary disqualification makes . . . an order
discharging him absolutely or conditionally”
may or must disqualify or endorse. It was noted in Clarke that the reference to
section 14(3) must have been included because of Taylor v Saycell. In Clarke the
court said at para 52 that it followed from the reference to section 14(3) in section
46 of the RTOA 1988 that the draftsman was “accepting” Lord Goddard’s
interpretation of what is now section 14(3), namely that it prevented the imposition
of any disqualification or disability in the proceedings for the offence for which
the conditional discharge had been granted, subject to any contrary enactment.
37. It was submitted on behalf of the respondent that the effect of Taylor v
Saycell and Dennis v Tame was that sentencing courts should not impose absolute
or conditional discharges in an attempt to avoid disqualification because such a
result was inconsistent with the statutory requirement that special circumstances
(or special reasons) must be found before disqualification could be avoided.
38. For my part, I am not persuaded that either those cases or section 46 of the
RTOA 1988 carry the present debate much further forward. The cases do no more
than reflect the position as it stood under the statutes then in force. Otherwise all
that the cases did was to say that, as a matter of principle, the courts should not use
an absolute or conditional discharge in order to avoid the effect of the RTA 1930,
which required disqualification in the absence of special circumstances. The
reason the cases were decided as they were was because of section 12(2) of the
1948 Act. They were concerned with the circumstances in which the court should
impose an absolute or conditional discharge where to do so would avoid the effect
of the statute. They treated the provisions of the statute as paramount. They were
Page 15
not concerned with the position we have here, where the terms of the statute are
said to yield to the fact of a conditional discharge.
39. In all these circumstances I remain of the view that there is an important
distinction between the correct approach where the court has a power to impose a
penalty together with an absolute or conditional discharge and the correct approach
where the court has a duty to do so on the true construction of the statute.
40. However, whether that is correct or not, all turns on the true construction of
the 2002 Act. In my opinion, for the reasons I have given in paras 12 to 22 above,
on its true construction the 2002 Act imposes a duty upon the court to make a
confiscation order, whether the section 6 proceedings take place before or after the
sentencing process.
41. As to the second reason in para 31 of Clarke, the court’s reasoning may be
summarised in this way. Parliament had enacted legislation empowering courts to
make various other punitive orders and had in the same legislation specified that
such orders could be made even where an absolute or conditional discharge had
been imposed. Examples of such punitive orders were orders disqualifying a
person from driving under section 46(1) of the RTOA 1988, “exclusion orders”
made under section 1 of the Licensed Premises (Exclusion of Certain Persons) Act
1980, designed to deal with persons who commit violent offences on licensed
premises, “banning orders” made under the Football (Disorder) Act 2000 and
orders made under the Sex Offenders Act 1997 requiring a defendant to comply
with notification requirements. The 2002 Act does not expressly provide for the
making of a confiscation order where an order for discharge is imposed. The
absence of a specific provision in the 2002 Act could be taken to show
Parliament’s intention that confiscation orders should not be coupled with an order
for absolute or conditional discharge. This was so notwithstanding the fact that the
2002 Act imposed a mandatory regime for confiscation orders.
42. The difficulty with this general point is that identified on behalf of the
appellant. Each of the statutes referred to empowered or required the court to
impose a “disqualification or disability” of one kind or another. The explicit
reference in those statutes to the regime for conditional and absolute discharges
appears to have been designed principally to ensure that courts do not interpret
section 14(3) of the 2000 Act as preventing the court from making such orders.
However, first, section 14(3) would have no application to confiscation orders
because a confiscation order is not a disqualification or disability. Secondly, it
does not necessarily follow from the fact that other legislation contains an express
provision permitting a punitive order and an absolute or conditional discharge to
be made in respect of the same offence that the absence of such a provision in the
Page 16
2002 Act has the effect of preventing a court from imposing both a confiscation
order and an absolute or conditional discharge.
43. All depends upon the scheme of the particular Act and, for the reasons I
have given, I would accept the submission made on behalf of the appellant that the
scheme of the 2002 Act demonstrates an intention on the part of Parliament to put
in place a mandatory scheme of confiscation designed to deprive offenders of the
benefit of their offending.
The history of the 2002 Act
44. Some reliance was placed upon the history of the 2002 Act, which was
considered in detail by the Court of Appeal in Clarke. The first statute which
provided for confiscation to which we were referred was the Drug Trafficking
Offences Act 1986 (“the 1986 Act”). Section 1(1)-(5) were very similar to what
became section 6 of the 2002 Act. In summary, they required the court to take
certain steps when a person appeared before the Crown Court for sentencing. They
required the court to determine whether he had benefited from the drug trafficking
offence or offences for which he was to be sentenced.
45. Section 1(4), (5) and (6) then provided:
“(4) If the court determines that he has so benefited, the court shall,
before sentencing or otherwise dealing with him in respect of the
offence or, as the case may be, any of the offences concerned,
determine in accordance with section 4 of this Act the amount to be
recovered in his case by virtue of this section.
(5) The court shall then, in respect of the offence or offences
concerned –
(a) order him to pay that amount,
(b) take account of the order before –
(i) imposing any fine on him, or
(ii) making any order involving any payment by him,
or
(iii) making any … (forfeiture orders), … or …
(deprivation orders), and
(c) subject to paragraph (b) above, leave the order out of
account in determining the appropriate sentence or other
manner of dealing with the defendant.
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(6) No enactment restricting the power of a court dealing with an
offender in a particular way from dealing with him also in any other
way shall by reason only of the making of an order under this section
restrict the Crown Court from dealing with an offender in any way
the court considers appropriate in respect of a drug trafficking
offence.”
46. The 1986 Act was followed by the Criminal Justice Act 1988 (“the 1988
Act”), which extended the confiscation regime beyond drug trafficking. Section
72(5) and (6) of the 1988 Act were in very similar terms to sections 1(5) and (6) of
the 1986 Act. The 1988 Act was amended by a number of subsequent Acts. Those
amendments included the addition of section 72A, which provided for the
postponement of the confiscation proceedings in very similar terms to the
equivalent provisions of the 2002 Act. It is of interest to note the following.
Section 72A(7) provided that, where the court exercised its power of
postponement, it might “nevertheless proceed to sentence, or otherwise deal with,
the defendant in respect of the offence or any of the offences concerned”. See also
section 72A(8)(c) and section 72A(9), which provided that in “sentencing, or
otherwise dealing with, the defendant during the period of postponement, the court
must not impose a fine or other financial penalty on him”.
47. The Drug Trafficking Act 1994 (“the 1994 Act”) repealed and replaced the
1986 Act. It was limited to drug trafficking offences but was in very similar terms
to the 2002 Act. The equivalent of section 13(2), (3) and (4) in the 2002 Act was
section 2(5) of the 1994 Act, although by section 2(5)(c) it provided that, subject to
paragraph (b) (which was the equivalent of section 13(2) and (3)), the court must
leave the confiscation order out of account “in determining the appropriate
sentence or other manner of dealing with” the defendant. Section 3 provided for
postponed determinations in very similar terms to section 15 of the 2002 Act, save
that in subsection (7) it gave the court power during the postponement to “proceed
to sentence, or otherwise deal with” the defendant and in subsection (9) it
prohibited the court from imposing a fine or other specified financial penalty “in
sentencing, or otherwise dealing with, the defendant”.
48. The 2002 Act has replaced both the 1988 Act and the 1994 Act. In the
Court of Appeal in the instant case the court noted in para 28 that the position
when the 2002 Act came into force was that the effect of section 72(6) of the 1988
Act and of section 2(6) of the 1994 Act, which was of course the successor to
section 1(6) of the 1986 Act, was that the court was not deprived of its power to
make a confiscation order in addition to an absolute or conditional discharge or
vice versa. In summary, the position when the 2002 Act came into force was that
the court had both the duty (or in rare cases power) to make a confiscation order
and also had the power to make an order for an absolute or conditional discharge
in an appropriate case.
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49. The Court of Appeal noted that an equivalent provision to section 2(6) of
the 1994 Act was included as clause 14(7) of the Bill which led to the 2002 Act
but that the clause was removed from the Bill before it was enacted. The Court of
Appeal plainly thought that it was very unlikely indeed that Parliament intended to
change that position, when enacting the 2002 Act. It held (or would have held) that
section 13(4) was in sufficiently clear terms to make such a provision unnecessary.
It is of interest to note that, according to the explanatory note to section 13, it
reproduces the effect of the existing legislation.
Conclusions
50. I would accept the approach of the Court of Appeal to the position as it was
when the 2002 Act came into force. However, I am aware that the distinguished
commentator, Dr David Thomas QC, has expressed the view in [2010] Crim LR
64 and 790 that, in so far as the argument of the appellant rests upon section 1(6)
of the 1986 Act and section 72(6) of the 1988 Act it rests on what he calls an
uncertain foundation. Fortunately the conclusion which I have reached does not
depend upon that foundation, whether uncertain or not. It depends upon my view
of the true construction of the relevant provisions of the 2002 Act, which I have set
out in paras 12 to 22 above. I note in passing that Dr Thomas does not express a
view on the Court of Appeal’s opinion that Clarke was wrongly decided. For my
part, I agree with the Court of Appeal that section 13(4) is in clear terms and that
Clarke was wrongly decided. In para 77 (quoted at para 26 above) the court in
Clarke referred to the fact that the 2002 Act required the making of a confiscation
order but simply said that it did not think that that affected the conclusion they had
reached. I respectfully disagree. The issue was one of construction of the 2002
Act, which in my opinion required the making of a confiscation order whatever
order was made as a result of the sentencing exercise. In short it is my view that in
Clarke the court placed insufficient weight upon the mandatory provisions of the
statute.
51. On behalf of the appellant some reliance was placed upon the obligations of
the United Kingdom under what is known as the Framework Decision, namely the
Council Framework Decision of 26 June 2001 “On Money Laundering, the
Identification, Tracing, Freezing, Seizing and Confiscation of Instrumentalities and
the Proceeds of Crime” (2001/500/JHA). In the light of the conclusion which I
have reached above, it is not necessary further to lengthen this judgment by
referring to its provisions.
Punishment
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52. There was some discussion in the course of the argument as to whether the
making of a confiscation order is or is not punishment within the meaning of
section 12(1) of the 2000 Act. The relevance of the issue is that, if a confiscation
order is not punishment, it is not inconsistent with an order for an absolute or
conditional discharge, which can only be made if it is inexpedient to inflict
punishment, whereas if it is punishment, it is said to be inconsistent with an
absolute or conditional discharge.
53. The argument that a confiscation order is not punishment is that it is not
intended to punish the defendant but to ensure that he disgorges any benefit he has
made from crime, at any rate to the extent of his assets. On the other hand, the
court in Clarke expressed the clear view that such an order is punishment: see in
particular paras 65 and 74. It noted in para 65 that it has been treated as part of the
process of sentencing and that, at least for some purposes, has been held to be a
penalty: see eg R v Briggs-Price [2009] 1 AC 1026, paras 30, 63, 112, 113, 115
and 134. At para 74 the court said:
“There can be no doubt that confiscation orders constitute
punishment. The regime under what is now the 2002 Act is aptly
described as ‘Draconian’. The use of the offender’s realisable assets
to recover any benefit (not merely profit), including benefits from
criminal activity unassociated with the index offence with a
maximum of ten years’ imprisonment in default must constitute
punishment. Thus, applying these cases, the making of a confiscation
order is inconsistent with a finding that it is inexpedient to inflict
punishment.”
54. It seems to me that must be correct. However, it is not necessary to reach a
final conclusion on that question because section 13(4) of the 2002 Act expressly
provides that the confiscation order must be left out of account in deciding the
appropriate sentence for the defendant. It follows that whether a confiscation order
is punishment or not is irrelevant to the question whether or not to make an order
for an absolute or conditional discharge.
Scotland
55. The conclusions which I have reached seem to me to receive strong support
from the position in Scotland, which is governed by Part 3 of the 2002 Act.
Section 92 of the 2002 Act is almost identical to section 6, most of which is set out
above. Section 92, however, provides three conditions rather than two. So far as
relevant to the question in this appeal, section 92 provides:
Page 20
“(1) The court must act under this section where the following three
conditions are satisfied.
(2) The first condition is that an accused falls within either of the
following paragraphs –
(a) he is convicted of an offence or offences, whether in
solemn or summary proceedings,
or
(b) in the case of summary proceedings in respect of an
offence (without proceeding to conviction) an order is made
discharging him absolutely.
(3) The second condition is that the prosecutor asks the court to act
under this section.
(4) The third condition is that the court decides to order some
disposal in respect of the accused; and an absolute discharge is a
disposal for the purpose of this subsection.”
The remaining provisions are identical or almost identical to those in Part 2
relating to England and Wales which are quoted above. The significant provisions
for present purposes are subsections (2)(b) and (4). Subsection (2)(b) provides that
the first condition is satisfied in the case of summary proceedings if, without
proceeding to a conviction, an order is made discharging the defendant absolutely
and subsection (4) provides that the third condition is satisfied if the court decides
to order a disposal, an absolute discharge being a disposal for that purpose.
56. It is thus plain that, at any rate in the case of Scotland, Parliament expressly
contemplated that the court will have a duty to make a confiscation order in
circumstances in which it thinks it right to make an order for an absolute
discharge, both where there is a conviction and where there is not. It seems
inconceivable that Parliament intended that in England and Wales the making of
an order for an absolute discharge should be a bar to the making of a confiscation
order. In these circumstances, the position in Scotland seems to me to give some
force to the underlying rationale of the construction of the 2002 Act set out in
paras 12 to 22 above.
Postscript
57. There was a suggestion that confiscation proceedings after an absolute or
conditional discharge were or might be an abuse of process or an infringement of
the appellant’s rights under Article 1 Protocol 1 of the European Convention on
Human Rights (“A1P1”). However, the duty of the court to make a confiscation
order arises where the defendant has benefited from either general or particular
Page 21
criminal conduct and the court has determined the recoverable amount, which is
defined in section 7(1) of the 2002 Act as an amount equal to the defendant’s
benefit from the conduct concerned. I do not see how such proceedings could be
an abuse of process. The present case is not concerned with the determination of
the amount of that benefit or with the possible application, for example, of the
provisions of A1P1 to that determination. A1P1 may have its part to play on issues
of proportionality but not in the context of this appeal.
Disposition
58. As stated in para 6 above, the certified question is
“Does the Crown Court have power to make a confiscation order
against a defendant following conviction for an offence if he or she
receives an absolute or conditional discharge for that offence?”
For the reasons I have given, I would answer that question in the affirmative but I
would go further. I would hold that, where the criteria in section 6 of the 2002 Act
are satisfied, subject to subsection (6), the Crown Court has a duty to make a
confiscation order against a defendant following conviction for an offence,
whether or not he or she receives an absolute or conditional discharge for that
offence. Where subsection (6) applies, that duty must be treated as a power. In all
the circumstances I would allow the appeal and restore the confiscation order in
the sum of £1,500.
LORD PHILLIPS
59. I am in full agreement with the judgment of Lord Clarke. I wish, however,
to add a footnote, based on information supplied pursuant to a request from the
Court. The prosecuting authority responsible for the prosecution of Mr Varma and
for the decision to seek a confiscation order was the Revenue and Customs
Prosecutions Office (“the Customs”). Where the Customs seize goods that a
defendant is seeking to bring into the country without paying duty it would be
open to them to confiscate the goods, to prosecute the defendant and to exact the
duty payable on them. It is, however, their practice, where they prosecute in such
circumstances, not to seek to exact payment of the duty but to initiate confiscation
proceedings in the amount of the duty payable instead. That is what they did in the
case of Mr Varma. This practice may well be convenient, but I doubt whether it is
legitimate.
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60. Mr Varma pleaded guilty to section 170(2)(a) of the Customs and Excise
Management Act 1979, which provides, in so far as material:
“if any person is, in relation to any goods, in any way knowingly
concerned in any fraudulent evasion or attempt at evasion – (a) of
any duty payable on the goods…” (my emphasis).
I consider it questionable whether, in confiscation proceedings, it is legitimate to
treat a defendant in the position of Mr Varma as having evaded duty when the only
reason that he has done so is that the Customs have chosen not to exact it. If I am
correct, then it is doubtful whether there was any basis for bringing confiscation
proceedings in this case. I am aware that I am questioning the assumption that
underlay the decision of the House of Lords in R v David Smith [2002] 1 WLR 54,
but that aspect of that decision (at least) calls out for review. It has not, however,
been challenged in this case so the confiscation order made must stand.
LORD MANCE
61. I agree with the judgment delivered by Lord Clarke and with his proposed
disposal of this appeal.
62. As a member of the Court of Appeal with whose judgment the House of
Lords disagreed in R v David Smith [2001] UKHL 68, [2002] 1 WLR 54, I have
read with a particular interest Lord Phillips’s supplementary judgment. In it he
doubts “whether, in confiscation proceedings, it is legitimate to treat a defendant
…as having evaded duty when the only reason that he has done so is that the
Customs have chosen not to exact it”. That, he suggests, was the assumption
underlying the decision in David Smith.
63. A problem about this suggestion appears to me to be that the evasion relied
upon by the Customs in such cases as David Smith and the present lies in the initial
importation of the dutiable goods without declaration or payment of duty, not in
any non-payment resulting from Customs’ failure to pursue the defendant. On that
basis, therefore, the argument resolves itself into a question “whether he has
benefited from his particular criminal conduct”. That was the question which the
Court of Appeal answered in the favour of, and the House of Lords answered
against, the defendant in David Smith.
64. As I understand Lord Phillips’s current suggestion, it would be impossible
to treat any smuggler as having actually evaded any duty payable on the goods,
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Page 24
unless and until it was clear that Customs could not pursue him for – and
presumably actually recover – the duty. All that could be said until then was that
the defendant was, by not declaring the importation and by not paying the duty,
attempting to evade the duty payable. Without having heard argument on the point,
I see some difficulty in thinking that this analysis reflects the ingredients of the
criminal offence created by section 170(2) of the Customs and Excise
Management Act 1979.
65. That does not mean that I do not consider that the proper scope of
confiscation orders in the present area merits further consideration at the highest
level.